Education of the Chattering Class: New Book Should Open Some Eyes on Wall Street
by Douglas Messier
Managing Editor
One of the fascinating things to watch since Virgin Galactic went public 18 months ago has been stock analysts’ and other supposed experts’ takes on the company. I’ve read articles, watched YouTube videos and CNBC reports, and closely followed quarterly earnings calls.
My conclusion: most of them didn’t have a clue.
They didn’t understand the limits of the technology, the risks involved or the history of a company notorious for spin, unrealistic forecasts, excessive spending and failing to deliver on any of its extravagant promises over its entire existence. Virgin Galactic hasn’t flown a single tourist in 16 plus years, but for some reason people bought into its promises of developing much more difficult hypersonic/supersonic travel. Why?
Well, they’re going to get one hell of an education starting tomorrow. That’s when Nicholas Schmidle’s book, Test Gods: Virgin Galactic and the Making of a Modern Astronaut, goes on sale. The author was embedded with the company for several years and was provided unprecedented access to meeting and documents.
I haven’t read the book yet, but some interesting things have become public that I’ve already written about here. For instance, Virgin Galactic nearly suffered a second tragedy when VSS Unity sustained severe damage that came perilously close to destroying it and killing its three member crew. The VP of safety subsequently stepped down because he had lost confidence in Virgin Galactic’s safety culture.
[See: Virgin Galactic’s Second Suborbital Flight Nearly Destroyed Ship and Killed Crew]
Virgin’s Galactic’s president dismissed flight estimates produced by the CFO as a “pipe dream.” Similarly rosy predictions were used to sell the merger by which the company went public.
[See: Book: Virgin Galactic’s President Moses Believed Company’s Flight Projections were a “Pipe Dream”]
They will also get an in-depth account of the 2014 crash that destroyed VSS Enterprise and killed Scaled Composites test pilot Mike Alsbury.
[See: 3 Seconds to Disaster: The SpaceShipTwo Accident]
What these stock experts will discover reading the book is what people in Mojave and followers of this blog have long known: Virgin Galactic’s technology looks better than it actually is, the company has long suffered from bad management and a broken safety culture, and much of what the Virgin Galactic has said over the years has been disconnected from reality.
Most important, they should understand just how risky these flights have been. This technology is very much on the edge. There are no government safety regulations to protect passengers and crew. And spaceflight participants must sign away most of their rights to sue in the event of injury or death.
Virgin Galactic originally planned to report first quarter earnings losses tomorrow. On Friday, the company postponed the release by six days until Monday, May 10, nominally so it could restate its financials for 2019 and 2020 due to a Securities and Exchange Commission statement on how stock warrants should be treated.
[See: Virgin Galactic Delays Quarterly Earnings Report as Blue Origin Ticket Sales Announcement Looms]
My guess is the real reason is Virgin Galactic wanted to be able to respond to rival Blue Origin’s plan to begin selling tickets on the New Shepard suborbital vehicle on May 5. Jeff Bezos’ company is expected to announce ticket prices and a schedule for the start of commercial flights.
It’s not clear whether the book release was a factor in the delay. Review copies are already out there for the media. It’s likely that the company has a good idea of what’s in it. There might have been a pre-publication review of the manuscript.
Stories will likely be all over the media for the next week. When company officials do their earnings call, whatever message they want to deliver could well be overwhelmed by questions about the revelations in the book. Or perhaps the impact of the news will diminish by then.
Virgin Galactic has proven as expert at spin as it has been incapable at delivering on its promises. Analysts and reporters have been remarkable receptive to the company’s public relations, and quite reluctant to get on its bad side by raising difficult questions. When you do, you don’t get your inquiries answered or invited to the company’s events.
Virgin Galactic occupies a curious position: not sufficiently successful or important enough to pay that much attention to in an industry dominated by SpaceX, which is sending tourists into orbit; but so high profile that nobody wants to alienate the company.
That Virgin Galactic will be risking passengers lives in an unregulated industry that largely protects its billionaire owners from liability while pursuing a program that has already killed four people and left four others hospitalized doesn’t seem to matter all that much. There’s an acceptance of the risk and legal regime that’s been put in place that might look complacent in retrospect a few years from now.
We will see if that changes. It should be an interesting week.
19 responses to “Education of the Chattering Class: New Book Should Open Some Eyes on Wall Street”
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Eric Berger’s article gives a nice ‘taster’ of the book’s ‘flavor’…
https://arstechnica.com/sci…
…and suggests it’s somewhat ‘bittersweet’ 🙂
There’s certainly going to be much to discuss/argue over, especially if VG folds, but I think the most obvious lesson to be learned is the dangers of over-selling nascent technologies… but isn’t that true of all human space endeavors to date?
Eric Berger runs an infomercial for spacex at Ars Technica….nothing is good but spacex. If he were to show up for the first SLS launch he would likely be….”made unwelcome.”
He has authored a small library of death-to-SLS propaganda over the years.
When the world gives America a standing ovation at the first launch he had damn well better hang his head in shame. Like all the fanboys who have worked directly against the U.S. space program for so long.
Kathy Lueders runs HEOMD these days. Her ambit very much includes SLS and Orion now. Given that Berger is always either an in-person or via-phone attendee of every significant NASA manned space press event, I don’t see that changing for any such events related to SLS. It’s not like Lueders has any particular debt to Boeing or Marshall, both of which did much to jam her up in her long-time previous position as head of Commercial Crew.
Much of the world will simply ignore the first – and quite possibly only – flight of SLS when it finally happens next year. They’ll save any applause for HLS Starship when it returns Americans to the lunar surface for the first time in over a half-century.
It isn’t true of SpaceX or Rocket Lab. There may be some additional names to add to that list before much longer too.
An unsafe carnival ride at any speed for the rich. We might lose a few billionaires with this contraption.
Not unless we lose Branson on the first commercial flight – assuming he’s actually still a billionaire. The billionaires will mostly opt for orbital jaunts in Crew Dragon 2 until a passenger-capable Starship replaces it.
VG might lose some millionaires though.
14 CFR Part 460 sets out the FAA requirements for commercial human spaceflight as far as occupants go. Congress hasn’t allowed them to do more (although, being diligent they have released ‘recommended practices’ but, as the article says, with no force of law). So I don’t think the government can be blamed as such, they might as easily have over-regulated the thing out of existence. The real problem has been that none of these suborbital flight providers has actually commenced commercial service (BO might be doing so shortly) – if they had, I think the FAA would now be in a position to have used the flight history to make some more detailed rules, particularly for medical standards etc. If BO can get going and get 12 – 24 months worth of regular commercial flights in, then I think you will see the regs. being updated with some empirically-derived safety requirements that better reflect the in-service experience.
“There’s an acceptance of the risk and legal regime that’s been put in
place that might look complacent in retrospect a few years from now.”
I think that’s true. With Virgin I think there’s another aspect to their risk culture. Where they, and the FAA were willing to accept risk. The fueling accident, and the improper flying and resultant breakup of VSS Enterprise were very preventable accidents well within the ability of technology and operations culture to prevent. Those fatal accidents did not occur in the regime we see Starships failing now, namely in new flight regimes for operating rocket engines. The systemic failures of the Raptor fuel management system to deliver propellant to the engines during the pitch over before landing make a sort of sense. This is pioneering engine and operations development. What’s doomed Virgin’s efforts are all areas that should not have been lethal. Virgin has flawed practice when it comes to where they’ll accept risk and where they will not.
I have to agree that the operational control of safety (such as ‘safety’ can be understood in the context of a flight test regime) does look weak. Also a function of long intervals between flights. Reading between the lines, I would say the verification and validation process required by the FAA hasn’t been an easy road. How are they only now realising that the onboard systems are susceptible to electromagnetic interference? pretty basic stuff really! they don’t seem mindful of a fair few things that you would have to deal with with, say, an executive jet certification program. I would add another factor (referenced by Doug and a lot of others) – that they are struggling to close the gap left by some critically poor design choices right back at the beginning, and I’m not just referring to the choice of propulsion system. I also get a sense that they probably have identified lots of viable solutions, but because of the design choice, are stuck with having to rule them out just because there is precious little weight margin to get above 80km. They could probably sort a lot of problems if they only had to get to 250k feet
Or if VG had a real engine instead of that flying tire dump fire they’ve got now.
But it did such a good job cooking hotdogs in the test Scaled Composite ran as shown in the Black Sky documentary.?
Scaled Composites Prototype Aircraft and Hot Dog Stand. Synergistic businesses in action.
Spaceship III, VSS Imagine, could be a nice Disneyland simulated ride to outer space. It would be like Epcot’s Mission Earth at Disney World. It would be safe!
https://disneyworld.disney….
Yes, so long as VG doesn’t actually try to fly the thing. Disney should put it on a big Stewart platform and charge admission.
Space Tourism is a dead end. Doug should get rid of the “SPACE TOURISM & MUCH MORE” at the top of the page.
Hypersonic rocket travel….not such a stupid idea simply because executive jets are very often used for emergency medical transport as a tax-write-off when they are not being used as a billionaire bus.
That caveat makes all the difference.
Space tourism will be a very substantial business a decade hence. VG will be long gone and will play no part in that.
Unless VG dumps SS2 and cuts a deal with SpaceX to market the Starship for tourist flights. It is really the only way to salvage the firm. A good firm knows when to cut its losses and adapt to the new reality.
Virgin Galactic is like ARCA space with higher production values
Only to be expected given that VG has a much bigger budget to play with.